MCI announced a price discount plan for small firms.Their stock immediately fell in price.This shows that:

Question

Quizplus · Accepted Answer

The fact that MCI's stock fell in price immediately after announcing a price discount plan for small firms suggests that the company is operating in an oligopolistic industry, where price competition among firms is a key factor. This is because the announcement of a price discount plan is likely to trigger a price war with other competitors, causing a decrease in profits and stock prices for all firms involved. Therefore, option A is the best choice because it explains the likely reason for the stock price decline.

MCI Announced a Price Discount Plan for Small Firms